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We’ve got another high powered economic event for the Greenback to close out the week, putting this potential range breakout on USD/JPY near the top of the watchlist.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12871.92 -0.30%
FTSE: 7247.46 -1.14%
S&P 500: 3028.13 -0.61%
DJIA: 26973.43 -0.78%
US 10-yr 1.693% -0.103
Bund 10-YR -0.419% -0.062
UK 10-YR: 0.612% -0.076
JPN 10-YR: -0.132% -0.012
Oil: 53.75 -2.36%
Gold: 1516.20 +1.30%
Bitcoin: 9276.00 +0.91%
Etherium: 182.91 -0.15%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Australia Manufacturing index at 9:30 pm GMT
  • Japan Unemployment rate at 11:30 pm GMT
  • Australia PPI at 12:30 am GMT (Nov. 1)
  • Japan Manufacturing PMI at 12:30 am GMT (Nov. 1)
  • China Manufacturing PMI at 1:45 am GMT (Nov. 1)
  • Swiss CPI, Retail sales at 7:30 am GMT (Nov. 1)
  • Swiss Manufacturing PMI at 8:30 am GMT (Nov. 1)
  • U.K. Manufacturing PMI 9:30 am GMT (Nov. 1)
  • U.S. Non-Farm Payrolls at 12:30 pm GMT (Nov. 1)
  • Canada Manufacturing PMI at 2:00 pm GMT (Nov. 1)
  • U.S. ISM Manufacturing PMI at 2:00 pm GMT (Nov. 1)

What to Watch: USD/JPY

USD/JPY 1-Hour Forex Chart
USD/JPY 1-Hour Forex Chart

The monthly U.S. employment update is back and likely to shake up an already shaken U.S. dollar after yesterday’s monetary policy statement from the Federal Reserve (Fed Cuts Rates a Quarter Point, Powell Says Policy in Good Place).  With expectations that we’ll see some softening of the job sector based on the rising job cuts data and some weakness in yesterday’s ADP Private payrolls report (September total for jobs added was revised down from an initial 135,000 to 93,000), it’s possible could continue its intraweek trend lower if the weakness is confirmed by the government data.

That brings us to USD/JPY, which has been in a holding pattern for a lot of October, ranging between roughly 108.20 – 109.00. Yesterday’s FOMC statement quickly brought the pair down from the top of the range to the bottom, and now it’s possible a breakdown of the bottom of the range could be in the works.

For the bears, the momentum is in your favor and if we do see a weak U.S jobs update and bearish dollar reaction then it might be time to take action. A break below and retest of the 108.00 – 108.20 area is the technical pattern to watch out for, and given the longer-term trend lower, this could draw in technical traders from all time frames, as well as fundie players to spark a longer-term move.

For the USD bulls out there, a hot U.S. jobs number will likely draw in buyers, not only fresh ones but will likely cause profit-taking from yesterday’s drop. A buy from the 108.00 area is the ideal entry point and with the daily ATR at around 50 pips, the potential for a strong short-term return-on-risk is good if using that ATR as a stop guide while targeting the top of the October range in USD/JPY.